EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of October 2, 1999, by and between D and W Holdings, Inc., a Delaware
corporation (together with its successors and assigns permitted hereunder,
the "Company") and Xxxx X. Xxxx (the "Employee").
RECITALS
A. The Company and the Employee entered into an Employment
Agreement dated as of October 2, 1998 (the "Original Employment Agreement").
B. The Board of Directors of the Company (the "Board") determined
that it is in the best interest of the Company and its stockholders to
terminate the Original Employment Agreement and to enter into this Agreement
for purposes of the Company employing the Employee on the terms and
conditions set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the respective agreements and
covenants set forth herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. EMPLOYMENT PERIOD. Subject to Section 3, the Company hereby
agrees to employ the Employee, and the Employee hereby agrees to be employed
by the Company in accordance with the terms and provisions of this Agreement,
for a period (including any and all renewals thereof, the "Employment
Period") commencing on the date hereof and ending on the third anniversary of
such date; provided the Employment Period is renewable for a series of three
year terms thereafter as mutually agreed upon by the Company and Employee at
least 30 days prior to the end of the then term. In the event Employee
continues to perform services after the Employment Period, and pending
agreement for extension of the Employment Agreement, such services shall
constitute employment for an unspecified term, terminable at will, with or
without cause or reason, with or without advance notice, and with or without
pay in lieu of advance notice. If the Company provides the Employee with
notice of intent not to renew in accordance with the above, the Company may
in its discretion terminate Employee's services as of the date of such notice
by paying to Employee all amounts that will become due during the remainder
of the Employment Period.
2. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the term of the Employee's employment, the
Employee shall serve as President and Chief Financial Officer of the Company
and, in so doing, shall perform normal duties and responsibilities associated
with such position, subject to the general direction, approval and control of
the Chief Executive Officer of the Company or, if the Company does not have a
Chief Executive Officer, the Chairman of the Board of Directors.
(ii) During the term of the Employee's employment, and
excluding any periods of vacation and other leave to which the Employee is
entitled, the Employee agrees to devote substantially all his business time
to the business and affairs of the Company and to use the Employee's best
efforts to perform faithfully, effectively and efficiently his duties and
responsibilities.
(iii) During the term of the Employee's employment it
shall not be a violation of this Agreement for the Employee to (1) serve on
industry trade, civic or charitable boards or committees, (2) deliver
lectures or fulfill speaking engagements and (3) manage personal investments,
so long as such activities do not interfere with the performance of the
Employee's duties and responsibilities as an employee of the Company.
(iv) Employee agrees to observe and comply with the
Company's rules and policies as adopted by the Company from time to time.
(b) COMPENSATION.
(i) BASE SALARY. During the term of the Employee's
employment, the Employee shall receive an annual base salary ("Annual Base
Salary"), which shall be paid in accordance with the customary payroll
practices of the Company, in an amount equal to $250,000. The Board, in its
discretion, may at any time increase the amount of the Annual Base Salary to
such greater amount as it may deem appropriate, and the term "Annual Base
Salary," as used in this Agreement, shall refer to the Annual Base Salary as
it may be so increased. It is understood that the Company may, at any time,
in the discretion of the Board, increase, but not decrease, the amount of the
Annual Base Salary.
(ii) INCENTIVE BONUS. Employee shall be entitled to
an incentive bonus as set forth on Schedule A hereto.
(iii) INCENTIVE SAVINGS, STOCK OPTION AND RETIREMENT
PLANS. During the term of the Employee's employment the Employee shall be
entitled to
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participate in all incentive, savings, stock option and retirement plans,
practices, policies and programs applicable generally to other employees of
the Company ("Investment Plans"), as amended from time to time.
(iv) WELFARE BENEFIT PLANS. During the term of the
Employee's employment, the Employee and/or the Employee's family, as the case
may be, shall be eligible for participation in and shall receive all benefits
under the welfare benefit plans, practices, policies and programs ("Welfare
Plans") provided by the Company (including medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death
and travel accident insurance plans and programs), as amended from time to
time, to the extent applicable generally to other employees of the Company.
(v) PERQUISITES. During the term of the Employee's
employment, the Employee shall be entitled to receive (in addition to the
benefits described above) such perquisites and fringe benefits appertaining
to his position in accordance with any policies, practices and procedures
established by the Board, as amended from time to time.
(vi) EXPENSES. During the term of the Employee's
employment, the Employee shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by the Employee in accordance
with the Company's policies, practices and procedures, as amended from time
to time.
(vii) AUTOMOBILE. The Company recognizes the
Employee's need for an automobile for business purposes. The Company shall
provide the Employee with an automobile allowance of $650 per month plus
reasonable related expenses for maintenance, fuel and insurance.
(viii) VACATION. During the term of the Employee's
employment, the Employee shall be entitled to four (4) weeks paid vacation
each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Company and the Employee. Accrued vacation not taken in
any calendar year will not be carried forward or used in any subsequent
calendar year and the Employee shall not be entitled to receive pay in lieu
of accrued but unused vacation in any calendar year. Vacation will be deemed
to accrue daily for purposes of the payments described in Section 4 hereof.
(ix) STOCK OPTIONS. Upon the effective date of this
Agreement, the Employee will be entitled to the stock options described on
Schedule B hereto.
(c) KEY-MAN INSURANCE. At any time during the Employment
Period, the Company shall have the right to insure the life of the Employee
for the Company's sole benefit, and to determine the amount of insurance and
the type of policy. The Employee shall cooperate with the Company in taking
out such insurance by submitting to physical examinations, by supplying all
information required by the insurance
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company, and by executing all necessary documents. The Employee shall incur
no financial obligation by executing any required document, and shall have no
interest in any such policy.
3. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Employee's employment shall
terminate automatically upon the Employee's death during the Employment
Period. If the Disability (as defined below) of the Employee has occurred
during the Employment Period, the Company may give to the Employee written
notice in accordance with Section 12(b) of its intention to terminate the
Employee's employment. In such event, the Employee's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Employee (the "Disability Effective Date"), if, within the 30
days after such receipt, the Employee shall not have returned to perform,
with or without reasonable accommodation, the essential functions of his
position. For purposes of this Agreement, "Disability" shall mean the
Employee's inability to perform, with or without reasonable accommodations,
the essential functions of his position hereunder for a period of 120 days,
consecutive or non-consecutive, in any 12-month period due to mental or
physical incapacity, as determined by a physician selected by the Company or
its insurers and acceptable to the Employee or the Employee's legal
representative, such agreement as to acceptability not to be unreasonably
withheld or delayed. Any refusal by Employee to submit to a medical
examination for the purpose of determining Disability under this Section 3(a)
shall be deemed to constitute conclusive evidence of Employee's Disability.
Nothing in this Agreement shall be construed as a waiver of Employee's rights
under the Americans with Disabilities Act or any other applicable law or
statute relating to disabilities or handicaps.
(b) CAUSE OR WITHOUT CAUSE. The Company may terminate the
Employee's employment during the Employment Period for Cause or without
Cause. For purposes of this Agreement, "Cause" shall mean (i) a breach by the
Employee of the Employee's obligations under Section 2(a) (other than as a
result of physical or mental incapacity) which constitutes a continued
material nonperformance by the Employee of his obligations and duties
thereunder, and which is not remedied within 30 days after receipt of written
notice from the Company specifying such breach, (ii) commission by the
Employee of an act of fraud, embezzlement, misappropriation, willful
misconduct or breach of fiduciary duty against the Company; (iii) a material
breach by the Employee of Sections 7, 8, 10 or 11; (iv) the Employee's
conviction, plea of no contest or nolo contendere, or unadjudicated probation
for any felony or crime involving moral turpitude; (v) the failure of the
Employee to carry out, or comply with, in any material respect any lawful and
reasonable directive of the Board consistent with the terms of this
Agreement, which is not remedied within 30 days after receipt of written
notice from the Company specifying such failure; or (vi) the Employee's
unlawful use (including being under the influence) or possession of illegal
drugs on the Company's premises or while performing the Employee's duties and
responsibilities under this Agreement. For purposes of this
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Agreement, "without Cause" shall mean a termination by the Company of the
Employee's employment during the Employment Period for any reason other than
a termination based upon Cause, death, Disability or upon a Change of
Control, as defined below.
(c) GOOD REASON. The Employee's employment may be
terminated during the Employment Period by the Employee for Good Reason or
without Good Reason; provided, however, that the Employee agrees not to
terminate his employment for Good Reason unless (i) the Employee has given
the Company at least 30 days' prior written notice of his intent to terminate
his employment for Good Reason, which notice shall specify the facts and
circumstances constituting Good Reason, and (ii) the Company has not remedied
such facts and circumstances constituting Good Reason within such 30-day
period. For purposes of this Agreement, "Good Reason" shall mean:
(i) any significant reduction, approved by the Board
without the Employee's consent in the Employee's position, authority, duties
or responsibilities as contemplated in Section 2(a) or any other action by
the Company which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of written notice thereof given by the
Employee;
(ii) any termination or material reduction of a
material benefit under any Investment Plan or Welfare Plan in which the
Employee participates unless (A) there is substituted a comparable benefit
that is economically substantially equivalent to the terminated or reduced
benefit prior to such termination or reduction or (B) benefits under such
Investment Plan or Welfare Plan are terminated or reduced with respect to all
employees previously granted benefits thereunder;
(iii) any failure by the Company to comply with any of
the provisions of Section 2(b), other than an inadvertent failure not
occurring in bad faith and which is remedied by the Company promptly after
receipt of written notice thereof given by the Employee; or
(iv) without limiting the generality of the foregoing,
any material breach by the Company or any of its subsidiaries or other
affiliates (as defined below) of (A) this Agreement or (B) any other
agreement between the Employee and the Company or any such subsidiary or
other affiliate.
As used in this Agreement, "affiliate" means, with respect to a
person, any other person controlling, controlled by or under common control
with the first person; the term "control," and correlative terms, means the
power, whether by contract, equity ownership or otherwise, to direct the
policies or management of a person; and "person" means an individual,
partnership, corporation, limited liability company, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
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(d) CHANGE OF CONTROL. If a Change of Control (as defined
below) occurs during the Employment Period and the Board determines in good
faith that it is in the Company's best interest to terminate the Employee's
employment with the Company, within one year of such Change of Control the
Company may terminate the Employee's employment by giving the Employee
written notice in accordance with Section 12(b) of its intention to terminate
the Employee's employment. Any such termination by the Company as
contemplated in this Section 3(d) is referred to herein as a termination
"upon a Change of Control."
As used in this Agreement, "Change of Control" means the first
to occur of: (i) any sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company (including capital stock or
assets of operating subsidiaries) to any person or group of persons, (ii) a
majority of the Board of Directors of the Company shall consist of persons
who are not nominated collectively by Ardshiel, Inc. and its affiliates and
GE Investment Private Placement Partners II, a Limited Partnership or (iii)
the acquisition by any person or group (other than Ardshiel, Inc., GE
Investment Private Placement Partners II, a Limited Partnership and their
affiliates) of the power to vote or direct the voting of securities having
more than 50% of the ordinary voting power for the election of directors of
the Company.
(e) NOTICE OF TERMINATION. Any termination by the Company
for Cause or without Cause or upon a Change of Control, or by the Employee
for Good Reason or without Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b).
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall not
be more than 15 days after the giving of such notice). The failure by the
Employee or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause or a
termination upon a Change of Control shall not waive any right of the
Employee or the Company hereunder or preclude the Employee or the Company
from asserting such fact or circumstance in enforcing the Employee's or the
Company's rights hereunder.
(f) DATE OF TERMINATION. "Date of Termination" means (i) if
the Employee's employment is terminated by the Company for Cause or upon a
Change of Control, or by the Employee for Good Reason or without Good Reason,
the date of receipt of the Notice of Termination or any later date specified
therein pursuant to Section 3(e), as the case may be, (ii) if the Employee's
employment is terminated by the Company other than for Cause or upon a Change
of Control, the date on which the Company notifies the Employee of such
termination and (iii) if the Employee's
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employment is terminated by reason of death or Disability, the date of death
of the Employee or the Disability Effective Date, as the case may be.
4. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) FOR CAUSE; WITHOUT GOOD REASON; OTHER THAN FOR DEATH,
DISABILITY OR UPON A CHANGE OF CONTROL. If, during the Employment Period,
the Company shall terminate the Employee's employment for Cause or the
Employee shall terminate his employment without Good Reason, and the
termination of the Employee's employment in any case is not due to his death
or Disability or upon a Change of Control, the Employee shall forfeit all
rights to the Incentive Bonus otherwise due to him or to which he may be
entitled, all unexercised stock options held by Employee shall lapse and
expire, and the Company shall have no further payment obligations to the
Employee or his legal representatives, other than for the payment of: (i) in
a lump sum in cash within ten (10) days after the Date of Termination the sum
of the Employee's Annual Base Salary through the Date of Termination to the
extent not theretofore paid, any compensation previously deferred by the
Employee (together with any accrued interest or earnings thereon) and any
accrued vacation pay (collectively, the "Accrued Obligations"); and (ii) any
amount arising from the Employee's participation in, or benefits under, any
Investment Plans (the "Accrued Investments"), which amounts shall be payable
in accordance with the terms and conditions of such Investment Plans.
(b) DEATH. If the Employee's employment is terminated by
reason of the Employee's death during the Employment Period, all unexercised
stock options held by Employee shall immediately vest (in his legal
representatives) and become exercisable and the Company shall have no further
payment obligations to the Employee or his legal representatives, other than
for payment of: (i) in a lump sum in cash within ten (10) days after the Date
of Termination the Accrued Obligations; (ii) the Accrued Investments, which
shall be payable in accordance with the terms and conditions of the
Investment Plans; and (iii) the Incentive Bonus prorated from the first day
of the Company's then current fiscal year to the Date of Termination (the
"Prorated Incentive Bonus"), payable following calculation of the Incentive
Bonus in accordance with Section 2(b)(ii) hereof.
(c) DISABILITY. If the Employee's employment is terminated
by reason of the Employee's Disability during the Employment Period, all
unexercised stock options held by Employee shall immediately vest and become
exercisable and the Company shall have no further payment obligations to the
Employee or his legal representatives, other than for payment of: (i) in a
lump sum in cash within ten (10) days after the Date of Termination the
Accrued Obligations; (ii) the Accrued Investments, which shall be payable in
accordance with the terms and conditions of the Investment Plans; and (iii)
the Prorated Incentive Bonus, payable following calculation of the Incentive
Bonus in accordance with Section 2(b)(ii) hereof.
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(d) WITHOUT CAUSE OR FOR GOOD REASON. If the Employee's
employment is terminated by the Company without Cause or by the Employee for
Good Reason, all, unvested stock options held by Employee (the "Unvested
Options") shall immediately vest and become exercisable for a period of
thirty (30) days from the Date of Termination (the "Exercise Period") and the
Company shall have no further payment obligations to the Employee or his
legal representatives, other than for: (i) payment of, in a lump sum in cash
within ten (10) days after the Date of Termination, the Accrued Obligations;
(ii) payment of the Accrued Investments, which, except with respect to the
Unvested Options, shall be payable in accordance with the terms and
conditions of the Investment Plans; (iii) payment of the Prorated Incentive
Bonus, payable following calculation of the Incentive Bonus in accordance
with Section 2(b)(ii) hereof; and (iv) payment for each month during a period
of 24 months following the Date of Termination (the "Severance Period") of
one-twelfth of the sum of the Employee's Annual Base Salary on the Date of
Termination and 80% of the Incentive Bonus, in accordance with the customary
payroll practices of the Company. All Unvested Options which remain
unexercised at the end of the Exercise Period shall lapse and expire.
(e) CHANGE OF CONTROL. If the Employee's employment is
terminated upon a Change of Control as contemplated in Section 3(d), all
unexercised stock options held by Employee shall immediately vest and become
exercisable and the Company shall have no further payment obligations to the
Employee or his legal representatives, other than for (i) payment of, in a
lump sum in cash within ten (10) days after the Date of Termination, the
Accrued Obligations; (ii) payment of the Accrued Investments, which shall be
payable in accordance with the terms and conditions of the Investment Plans;
(iii) payment of the Prorated Incentive Bonus; and (iv) payment for each
month during the Severance Period of one-twelfth of the sum of the Employee's
Annual Base Salary on the Date of Termination and 80% of the Incentive Bonus,
in accordance with the customary payroll practices of the Company.
5. RETENTION BONUS. Following a "Change of Control," as
contemplated in Section 3(d), if the Employee is employed by the Company on
the 12-month anniversary of the Change of Control, the Company shall pay the
Employee a retention bonus in the amount of $250,000. Nothing in this
Section 5 shall be deemed to give the Employee the right to be retained in
the employ of the Company or to restrict the right of the Company to
terminate the Employee at any time and for any reason, without Cause or for
Cause or upon a Change of Control. Nothing in this Section 5 shall be deemed
to give the Company the right to require the Employee to remain in the employ
of the Company or to restrict the Employee's right to terminate his
employment at any time and for any reason, without Good Reason or for Good
Reason.
6. FULL SETTLEMENT; MITIGATION. In no event shall the Employee be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Employee under any of the provisions
of this Agreement and such amounts shall not be reduced whether or not the
Employee obtains other employment. Neither the
8
Employee nor the Company shall be liable to the other party for any damages
in addition to the amounts payable under Section 4 arising out of the
termination of the Employee's employment prior to the end of the Employment
Period; provided, however, that the Company shall be entitled to seek damages
from the Employee for any breach of Sections 7, 8, 9, 10, or 11 by the
Employee and either party shall be entitled to seek damages for criminal
misconduct.
7. CONFIDENTIAL INFORMATION.
(a) The Employee acknowledges that the Company and its
affiliates have trade, business and financial secrets and other confidential
and proprietary information (collectively, the "Confidential Information").
"Confidential Information" includes sales materials, technical information,
processes and compilations of information, records, specifications and
information concerning customers or vendors, manuals relating to suppliers'
products, customer lists, information regarding methods of doing business,
and the identity of suppliers. "Confidential Information" shall not include
(i) information that is generally known to other persons or entities who can
obtain economic value from its disclosure or use and (ii) information
required to be disclosed by the Employee pursuant to a subpoena or court
order, or pursuant to a requirement of a governmental agency or law of the
United States of America or a state thereof or any governmental or political
subdivision; PROVIDED, HOWEVER, that the Employee shall take all reasonable
steps to prohibit disclosure pursuant to subsection (ii) above.
(b) During and following the Employee's employment by the
Company, the Employee shall hold in confidence and not directly or indirectly
disclose or use or copy or make lists of any Confidential Information or
proprietary data of the Company or its affiliates except to the extent
authorized in writing by the Board or required by any court or administrative
agency, other than to an employee of the Company or its affiliates or a
person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Employee of his duties as an employee
of the Company.
(c) The Employee further agrees not to use any Confidential
Information for the benefit of any person or entity other than the Company or
its affiliates.
(d) As used in this Section 7, "Company" shall include D and
W Holdings, Inc. and any of its direct or indirect subsidiaries.
8. RESPONSIBILITIES UPON TERMINATION. Upon the termination of his
employment by the Company for whatever reason and irrespective of whether or
not such termination is voluntary on his part:
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(a) The Employee shall advise the Company of the identity of
his new employer within ten (10) days after accepting new employment and
further agrees to keep the Company so advised of any change in employment
during the term of Non-Competition set forth in Section 10 hereof;
(b) The Company in its sole discretion may notify any new
employer of the Employee that he has an obligation not to compete with the
Company during such term;
(c) The Employee shall deliver to the Company any and all
records, forms, contracts, memoranda, work papers, customer data and any
other documents which have come into his possession by reason of his
employment with the Company (including D&W Holdings, Inc. and its direct and
indirect subsidiaries), irrespective of whether or not any of said documents
were prepared for him, and he shall not retain memoranda in respect of or
copies of any of said documents; and
(d) The Employee shall participate in an exit interview with
the Company.
9. SUCCESSORS. The Company may assign its rights and obligations
under this Agreement to any successor to all or substantially all the assets
of the Company, by merger or otherwise, subject, however, to the Employee's
right to terminate this Agreement for Good Reason as provided in Section
3(c), and may assign or encumber this Agreement and its rights hereunder as
security for indebtedness of the Company and its affiliates. All
representations, warranties, covenants, terms, conditions and provisions of
this Agreement shall be binding upon and inure to the benefit of, and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the Company and Employee. Neither this Agreement nor
any rights, interests or obligations hereunder may be assigned by the
Employee without the prior written consent of the Company.
10. NON-COMPETITION.
(a) The term of Non-Competition (herein so called) shall be
for a term beginning on the effective date hereof and continuing until (i)
the first anniversary of the Date of Termination if the Employee's employment
is terminated by the Company for Cause or due to Disability or by the
Employee without Good Reason, or (ii) the last day of the Severance Period if
the Employee's employment is terminated by the Company without Cause (and not
due to Disability) or upon a Change of Control or by the Employee for Good
Reason.
(b) During the term of Non-Competition, the Employee shall
not (other than for the benefit of the Company or its affiliates pursuant to
this Agreement) directly or indirectly, render services to, assist,
participate in the affairs of, or otherwise
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be connected with, any person or enterprise (other than the Company), which
person or enterprise is engaged in, or is planning to engage in, and shall
not personally engage in, any business that is in any respect competitive
with the business of the Company, with respect to any products of the Company
that were within the Employee's management responsibility at any time within
the twelve-month period immediately prior to the termination of the
Employee's employment with the Company, in any capacity which would (i)
utilize the Employee's services with respect to such business within any
state of the United States, or any substantially comparable political
subdivision of any other country, wherein the Company sold or actively
attempted to sell, such products within the twelve-month period immediately
prior to the termination of the Employee's employment with the Company; or
(ii) utilize the Employee's services in selling any products similar to such
products of the Company to any person or entity to which the Company sold or
actively attempted to sell such products within the twelve-month period
immediately prior to the termination of the Employee's employment with the
Company (a "Competing Business"). Notwithstanding the foregoing, the Company
agrees that the Employee may own less than five percent of the outstanding
voting securities of any publicly traded company that is a Competing Business
so long as the Employee does not otherwise participate in such Competing
Business in any way prohibited by the preceding clause.
(c) During the term of Non-Competition, Employee will not,
and will not permit any of his affiliates to, directly or indirectly, recruit
or otherwise solicit or induce any employee, customer, subscriber or supplier
of the Company to terminate its employment or arrangement with the Company,
otherwise change its relationship with the Company or establish any
relationship with the Employee or any of his affiliates for any business
purpose deemed competitive with the business of the Company.
(d) The Employee acknowledges that the geographic
boundaries, scope of prohibited activities, and time duration of the
preceding paragraphs are reasonable in nature and are no broader than are
necessary to maintain the goodwill of the Company and its affiliates and the
confidentiality of their Confidential Information, and to protect the other
legitimate business interests of the Company and its affiliates.
(e) If any court determines that any portion of this Section
10 is invalid or unenforceable, the remainder of this Section 10 shall not
thereby be affected and shall be given full effect without regard to the
invalid provisions. If any court construes any of the provisions of this
Section 10, or any part thereof, to be unreasonable because of the duration
or scope of such provision, such court shall have the power to reduce the
duration or scope of such provision and to enforce such provision as so
reduced.
(f) As used in this Section 10, "Company" shall include D
and W Holdings, Inc. and any of its direct or indirect subsidiaries.
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11. INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions,
improvements and innovations (including all data and records pertaining
thereto) related to the Company's business, whether or not patentable,
copyrightable, registrable as a trademark, or reduced to writing, that the
Employee may discover, invent or originate during the Employment Period, and
for a period of twelve (12) months thereafter, either alone or with others
and whether or not during working hours or by the use of the facilities of
the Company ("Inventions"), shall be the exclusive property of the Company.
The Employee shall promptly disclose all Inventions to the Company, shall
execute at the request of the Company any assignments or other documents the
Company may deem necessary to protect or perfect its rights therein, and
shall assist the Company, at the Company's expense, in obtaining, defending
and enforcing the Company's rights therein. The Employee hereby appoints the
Company as his attorney-in-fact to execute on his behalf any assignments or
other documents deemed necessary by the Company to protect or perfect its
rights to any Inventions.
12. MISCELLANEOUS.
(a) CONSTRUCTION. This Agreement shall be deemed drafted
equally by both the parties. Its language shall be construed as a whole and
according to its fair meaning. Any presumption or principle that the
language is to be construed against any party shall not apply. The headings
in this Agreement are only for convenience and are not intended to affect
construction or interpretation. Any references to paragraphs, subparagraphs,
sections or subsections are to those parts of this Agreement, unless the
context clearly indicates to the contrary. Also, unless the context clearly
indicates to the contrary, (a) the plural includes the singular and the
singular includes the plural; (b) "and" and "or" are each used both
conjunctively and disjunctively; (c) "any," "all," "each," or "every" means
"any and all," and "each and every"; (d) "includes" and "including" are each
"without limitation"; (e) "herein," "hereof," "hereunder" and other similar
compounds of the word "here" refer to the entire Agreement and not to any
particular paragraph, subparagraph, section or subsection; and (f) all
pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural as the identity of the
entities or persons referred to may require.
(b) NOTICES. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Employee: Xxxx X. Xxxx
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
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If to the Company: D and W Holdings, Inc.
c/o Ardshiel, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxx
Xxxxx Xxxxxxxxxx
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) ENFORCEMENT. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a portion of this
Agreement; and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(d) WITHHOLDING. The Company shall be entitled to withhold
from any amounts payable under this Agreement any federal, state, local or
foreign withholding or other taxes or charges which it is from time to time
required to withhold. The Company shall be entitled to rely on an opinion of
counsel if any questions as to the amount or requirement of such withholding
shall arise.
(e) NO WAIVER. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or provision
of this Agreement to be performed by the other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at any time.
(f) EQUITABLE RELIEF. The Employee acknowledges that money
damages would be both incalculable and an insufficient remedy for a breach of
Section 7,
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8, 9, 10 or 11 by the Employee and that any such breach would cause the
Company irreparable harm. Accordingly, the Company, in addition to any other
remedies at law or in equity it may have, shall be entitled, without the
requirement of posting of bond or other security, to equitable relief,
including injunctive relief and specific performance, in connection with a
breach of Section 7, 8, 9, 10 or 11 by the Employee.
(g) COMPLETE AGREEMENT. The provisions of this Agreement
constitute the entire and complete understanding and agreement between the
parties with respect to the subject matter hereof, and supersedes all prior
and contemporaneous oral and written agreements, representations and
understandings between the Employee and the Company, or its affiliates and
subsidiaries, which are hereby terminated. Other than expressly set forth
herein, the Employee and the Company acknowledge and represent that there are
no other promises, terms, conditions or representations (oral or written)
regarding any matter relevant hereto. This Agreement may be executed in two
or more counterparts.
(h) MEDIATION; ARBITRATION. (i) The Company and the
Employee shall mediate any claim or controversy arising out of or relating to
this Agreement or any breach thereof if either of them requests mediation and
gives written notice to the other (the "Mediation Notice"). Any notice given
pursuant to the preceding sentence shall include a brief statement of the
claim or controversy. If the Company and the Employee do not resolve the
claim or controversy within five (5) days after the date of the Mediation
Notice, the Company and the Employee shall then use reasonable efforts to
agree upon an independent mediator. If the Company and the Employee do not
agree upon an independent mediator within ten (10) days after the date of the
Mediation Notice, either party may request that JAMS/Endispute ("JAMS"), or a
similar mediation service of a similar national scope if JAMS no longer then
exists, appoint an independent mediator. The Company and the Employee shall
share the costs of mediation equally and shall pay such costs in advance upon
the request of the mediator or any party. Within ten (10) days after
selection of the mediator, the mediator shall set the mediation. If the
Company and the Employee do not resolve the dispute within thirty (30) days
after the date of the Mediation Notice, the dispute shall be decided by
arbitration as set forth below.
(ii) Any claim or controversy arising out of or
relating to this Agreement or any breach thereof shall be settled by
arbitration if such claim or controversy is not settled pursuant to mediation
as set forth above. The venue for any such arbitration shall be Dallas,
Texas, or such other location as the parties may mutually agree. Except as
expressly set forth herein, all arbitration proceedings under this Section
12(h)(ii) shall be undertaken in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the "AAA") then in force.
Only individuals who are (i) lawyers engaged full-time in the practice of law
and (ii) on the AAA register of arbitrators shall be selected as an
arbitrator. There shall be one arbitrator who shall be chosen in accordance
with the rules of the AAA. Within twenty (20) days of the
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conclusion of the arbitration hearing, the arbitrator shall prepare written
findings of fact and conclusions of law. Judgment on the written award may
be entered and enforced in any court of competent jurisdiction. It is
mutually agreed that the written decision of the arbitrator shall be valid,
binding, final and non-appealable; provided however, that the parties hereto
agree that the arbitrator shall not be empowered to award punitive damages
against any party to such arbitration. The arbitrator shall require the
non-prevailing party to pay the arbitrator's full fees and expenses or, if in
the arbitrator's opinion there is no prevailing party, the arbitrator's fees
and expenses will be borne equally by the parties thereto. In the event
action is brought to enforce the provisions of this Agreement pursuant to
this Section 12(h)(ii), the non-prevailing parties shall be required to pay
the reasonable attorneys' fees and expenses of the prevailing parties, except
that if in the opinion of the court or arbitrator deciding such action there
is no prevailing party, each party shall pay its own attorneys' fees and
expenses.
(i) SURVIVAL. Sections 4, 6, 7, 8, 9, 10, 11, and 12 of
this Agreement shall survive the termination of this Agreement.
(j) CHOICE OF LAW. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with
the laws of the State of Texas without reference to principles of conflicts
of law of Texas or any other jurisdiction, and, where applicable, the laws of
the United States.
(k) AMENDMENT. This Agreement may not be amended or
modified at any time except by a written instrument approved by the Board and
executed by the Company and the Employee.
(l) EMPLOYEE ACKNOWLEDGMENT. Employee acknowledges that he
has read and understands this Agreement, is fully aware of its legal effect,
has not acted in reliance upon any representations or promises made by the
Company other than those contained in writing herein, and has entered into
this Agreement freely based on his own judgment.
(m) TERMINATION OF ORIGINAL EMPLOYMENT AGREEMENT. Effective
upon the execution of this Agreement, the Original Employment Agreement shall
automatically be terminated and of no further force or effect and Employee's
employment by the Company and its subsidiaries shall solely be governed by
this Agreement.
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IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization from the Board, the Company has caused
this Agreement to be executed in its name on its behalf, as of the 2nd day of
October, 1999.
EMPLOYEE
_____________________________________
D AND W HOLDINGS, INC.
By: ________________________________
Name: _______________________________
Title:_______________________________
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SCHEDULE A
TO HULL EMPLOYMENT AGREEMENT
Employee shall be entitled to a target bonus in the amount of $150,000
per annum (the "Incentive Bonus").
50% of the Employee's Incentive Bonus ("EBITDA Bonus") shall be
payable based upon achievement of the following targets:
(i) If the Company achieves 80% of its budgeted EBITDA, the Employee
shall receive 50% of the EBITDA Bonus.
(ii) If the Company achieves 90% of its budgeted EBITDA, the Employee
shall receive 75% of the EBITDA Bonus.
(iii) If the Company achieves 100% of its budgeted EBITDA, the Employee
shall receive 100% of the EBITDA Bonus.
(iv) If the Company achieves 110% of its budgeted EBITDA, the Employee
shall receive 125% of the EBITDA Bonus.
(v) The EBITDA Bonus will be paid on a sliding scale on a pro rated
basis. For example, if 95% of budgeted EBITDA is achieved, the Employee is
entitled to 87.5% of the EBITDA Bonus. No EBITDA Bonus will be paid if the
Company achieves less than 80% of the budgeted EBITDA and in no event will
the Company pay in excess of 125% of the EBITDA Bonus.
(vi) For purposes of the EBITDA Bonus, EBITDA shall be defined as
earnings from operations before interest, taxes, depreciation, amortization
and extraordinary gains or losses of the Company and all of its subsidiaries
on a consolidated basis. Budgeted EBITDA shall be such amount as is set by
the Board of Directors annually as adjusted from time to time to reflect
acquisitions by the Company or its subsidiaries.
35% of the Employee's Incentive Bonus shall be payable based upon
achievement of the following targets:
(i) If the Company meets the performance targets set by the Board
of Directors with respect to Bad Debts/Collections, then the Employee shall
be entitled to receive 10% of the Incentive Bonus.
(ii) If the Company meets the performance targets set by the Board of
Directors with respect to Accounts Receivable Days, then the Employee shall be
entitled to receive 15% of the Incentive Bonus.
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(iii) If the Company meets its performance targets with respect to
Month End Closing, then the Employee shall be entitled to receive 10% of the
Incentive Bonus.
(iv) The above-stated percentages of Incentive Bonus shall not be
paid on a sliding scale or pro rated basis. Achievement of the performance
targets set by the Board of Directors shall be determined by the Board of
Directors in its sole discretion. The above-described performance targets
shall be set from time to time by the Board of Directors in its sole
discretion.
The remaining 15% of the Employee's Incentive Bonus shall be based
upon the achievement of management objectives to be set from year to year by
the Board of Directors.
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SCHEDULE B
Stock Options:
1) Effective as of October 2, 1998, the Employee has been granted options
to purchase 1,183,842 shares of common stock (the Common Stock") of the
Company pursuant to the D and W Holdings, Inc. 1998 Stock Option Plan (the
"Plan") and options to purchase 125,000 shares of Common Stock pursuant to
the D and W Holdings, Inc. 1998 Replacement Plan (the "Replacement Plan").
Notwithstanding the terms of the Plan, the Replacement Plan or any stock
option agreement entered into thereunder by the Company and the Employee (the
"Option Documents"), the vesting schedule for such options is hereby amended
to provide that all such options that are unvested as of October 2, 1999
shall vest in daily increments from October 2, 1999 until October 2, 2002.
2) Effective as of July 1, 1999, the Employee has been granted options to
purchase 200,000 shares of Common Stock at an exercise price of $1.10 per
share. Notwithstanding the terms of the Option Documents, all such options
that are unvested as of July 1, 1999 shall vest in daily increments from July
1, 1999 until July 1, 2002.
3) Effective as of October 1, 1999, the Employee has been granted options
to purchase 75,000 shares of Common Stock at an exercise price of $.01 per
share and options to purchase 150,000 shares of Common Stock at an exercise
price of $1.25 per share. Notwithstanding the terms of the Option Documents,
all such options that are unvested as of the date hereof shall vest in daily
increments from October 1, 1999 until October 1, 2002.
4) Notwithstanding the terms of the Option Documents, in the event the
Company repurchases the stock options described in paragraphs 1, 2 and 3 of
this Schedule B (the "Options") upon the termination of the Employee's
employment by the Company without Cause or by the Employee for Good Reason
(but not in the event of termination of the Employee's employment upon a
Change of Control), the repurchase price for the Options shall not be less
than $1.25 per share (or $1.10 per share, if the Company shall not have
completed the acquisition of certain assets of The Xxxxxxx Company, Inc. (the
"Acquisition")), provided that the EBITDA for the Company for the most recent
twelve months is not less than $75 million (or $58 million, if the Company
shall not have completed the Acquisition).
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